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Davos Dispatches: Sarkozy Bids Farewell to Capitalism as We Know It

If there was any remaining doubt that the era of financial capitalism is over and the age of Big Government has begun, French President Nicolas Sarkozy dispelled it with his keynote speech today at the World Economic Forum in Davos. Sarko was in fighting form and seemed to delight in bashing everything from laissez-faire capitalism to overblown banker pay to the dysfunctional economic relationship between the U.S. and China. "Over the last few years, everything has been given to financial capitalism, and nothing has gone to labor. All that mattered was the present─the future counted for nothing. Companies took higher profits, yet inequity continued to grow. Capitalism is not an end─it should be a means to an end," he said, calling for new global regulation of banks, bankers, and markets. "If we don't reform the system, we'll be taking unforgivable risks in the future."

True, yet easier said than done. Much of the buzz thus far at Davos has been about how financial-markets regulation must be done at a global level. Yet already, the U.S. is going one way, the British another, and don't even ask about the Chinese; increasingly rich and confident, they are setting their own rules in practically every sector (the Chinese are everywhere at Davos this year, and CCTV has taken over the prime real estate usually held by the BBC). Indeed, Sarko got in a few punches at the Chinese, whom he indirectly accused of "monetary manipulation" and "dumping" cheap products on the rest of the world, throwing the global economy out of whack. The president
promised that the currency issue (read: a super-cheap yuan's distorting effect on trade and current accounts) would be front and center when France took over the G8 leadership in 2011.

Sarko also called on world leaders to get back to basics. "We need to ask simple questions─what does it mean to be a banker? It's not to speculate but to finance the real economy." Likewise, he said, the world needs to rethink the moral framework of capitalism. "The system can't exist unless it is embedded in a system of values." Finally, he indulged in a
bit of schadenfreude at the expense of Davos Man. "A few years ago, [corporate
leaders] told us that we were seeing the end of nations and the beginning of an
era of global nomads. Yet when the boat was rocked last year, all those
companies, no matter how global, remembered quite well which countries they came
from." By the time the French president and his counterparts are done throwing
down the regulatory law, they'll be unable to forget.